By the beginning of 2021, hospitals and other corporate entities, like insurers and private equity firms, owned about 48% of physician practices, according to a new report.
The report, commissioned by the Physicians Advocacy Institute and prepared by Avalere Health, examined physician practice acquisition between Jan. 1, 2019, and Jan. 1, 2021. Data was gathered from the IQVIA OneKey database.
The number of physician practices owned by hospitals or corporate entities jumped from 99,100 in January 2019 to 120,000 at the beginning of this year — a 21% hike, the report shows. The Covid-19 pandemic spurred this ownership trend, with an 8.5% spike in the rate of hospital-or corporate-owned physician practices occurring after the pandemic hit.
Hospitals, specifically, owned over a quarter (26.3%) of the nation’s physician practices by January 2021, up from about 24.3% in January 2019. The Midwest has the largest percentage of hospital-owned practices with 37.5%, far exceeding other regions.
There was a steeper rise in the proportion of physician practices owned by corporate entities — jumping from 14.6% at the beginning of 2019 to 22.1% this year. Once again, the pandemic propelled this acquisition trend. There was a 14.6% increase in the rate of corporate-owned physician practices following the onset of the pandemic, according to the report. The South saw the biggest hike in practice acquisitions by corporate entities, experiencing a 59% increase.
“Covid-19 exacerbated financial vulnerabilities of physician practices and forced them to make difficult decisions,” said Kelly Kenney, CEO of Physicians Advocacy Institute, in a news release. “The practice acquisition trend has potentially serious implications for competition and healthcare costs, which have been shown to increase with this type of marketplace consolidation.”
As a result of this practice consolidation, there has also been a decline in the number of independent physicians in the U.S. A little over 48,400 physicians left independent practices and became employees of hospitals or other corporate entities in 2019 and 2020. Of these, about 22,700 made that shift during the Covid-19 pandemic, the report states.
This means, by January 2021, 69% of physicians were hospital-or corporate-employed.
The biggest increases in the number of employed physicians — both hospital-and corporate-employed — were in the South, which saw a 15.4% spike, and the Northeast, where the number jumped by 11.2% between 2019 and 2020. But, overall, the Midwest leads other regions, with nearly 77% of physicians in the region employed by hospitals or corporate entities.
Photo: maxsattana, Getty Images, Avalere Health